Horizons ETFs rebalances its cannabis-focused funds

Growth of global medical marijuana opportunity and liberalization of cannabis laws in U.S. could both help drive marijuana stocks further.

Horizons ETFs Management (Canada) Inc. has completed the quarterly rebalance of the constituent holdings of the Horizons Marijuana Life Sciences Index ETF, and the Horizons Emerging Marijuana Growers Index ETF.

“This has been a difficult quarter for the marijuana sector, and the slowdown in growth contributed to fewer names being added to HMMJ’s portfolio,” Steve Hawkins, president and CEO of Horizons ETFs, reports in a company statement.

“HMMJ is the world’s first ETF offering direct exposure to North American-listed securities that are involved with marijuana bioengineering and production,” the statement explains. “Once again, the ETF has added additional companies to its portfolio as more firms have become eligible for inclusion in its underlying index—the North American Marijuana Index,” it notes.

“Long-term, we believe there are still quite a few drivers of growth for the sector, including the growth of global medical marijuana opportunity and continued liberalization of marijuana laws in the U.S. Both of these factors could help drive marijuana stocks further in 2019,” Hawkins maintains.

Rebalancing of the HMMJ occurs each calendar quarter. “At that point, all stocks eligible for inclusion are weighted by their respective market capitalization. However, no single stock can exceed a 10 percent weight of the North American Marijuana Index at the rebalance date,” notes the financial services company that offers a large suite of exchange traded funds.

As for the HMJR, this portfolio seeks to replicate, to the extent possible, the performance of the Emerging Marijuana Growers Index, net of expenses. “The Emerging Marijuana Growers Index is designed to provide exposure to the performance of a basket of primarily North American publicly listed small-capitalization companies primarily involved in the cultivation, production and/or distribution of marijuana,” the company adds.